An Easy Understanding into Shareholder & Director Company Meetings

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An Easy Understanding into Shareholder & Director Company Meetings

November 18, 2021 incorp 0 Comments

Reading Time: 6 Minutes –

Company meetings, be it Shareholder or Director Meetings are some of the many types of meetings that commonly occur in Malaysian companies, along with other types such as Class Meeting, Committee Meeting, Creditors’ Meeting, One Man Meeting, etc.

 

But for our current topic, what makes Shareholders’ and Directors’ Meetings both unique and different from one another? This article is catered towards providing you with insights on just that!

 

Meeting Types

To begin, Shareholder Meetings can be classified into two distinct categories, Annual General Meetings (AGMs) and Meeting of Members (MoMs). The difference between them is that AGMs are held once every year whereas MoMs are held anytime of the year, especially public holidays, IF deemed necessary. 

 

Alternatively, for Director Meetings, they are held as and when they are necessary.

 

a. Member Meeting Agenda (include but not limited to the following):

– Presentation and approval of minutes from previous year’s AGM

– Table and adoption of company’s audited financial statements

– Reappointment of auditors

– Fixing auditor’s remuneration

– Allocation of Director’s Fees

– Passing of Ordinary or Special Resolutions

 

b. Director Meetings Agenda (include but not limited to the following):

– Recommending dividends

– Appointment and Resignation of Directors

– Appointment of Chairperson

– Company Performance and more


Chairman of Meetings

Anyone is liable to be voted into the position of the meeting’s Chairman so long as her/him has been appointed by the majority of the present members at the meeting. Then s/he will lead the duration of the meeting.

 

Power to Requisite MeetingsDirectors have the duty to call for meetings required to be participated by relevant members. Any members holding more than 50% of shares can call for Meeting of Members (MoMs). 

 

Notice Period

Company meetings held by Shareholders have their notice periods based on their respective Constitution (formerly known as Memorandum & Articles of Association), subject to Section 316 of Companies Act 2016 (CA2016). 

 

For Annual General Meetings (AGM) of Sendirian Berhad companies, the notice period would be 14 clear days prior to the meeting’s commencement. Alternatively, for AGM of Berhad companies, a 21 clear days notice is required to be sent out before the meeting’s commencement.

 

Entitlement for Notice

Notice periods shall be sent to the relevant parties of those meetings such as Ordinary Shareholders, Preferred Shareholders, Auditors, Observers, and etc.

 

For Director Meetings, no notice period is required although optionally, it can be set in the company’s Constitution, subjected to Companies Act 2016 (CA2016).

 

Quorums

Quorums refer to the minimum number of participants in the meeting, however the number of participants and requirements differ between both Shareholder and Director Meetings. For those in Meeting of Members (MoMs), the minimum number of participants should be 2 and subject to the company’s Constitution.

 

As for Director Meetings, the quorum’s requirements are either fixed by the Board or majority of Directors present. Important matters such as conducting businesses may NOT be transacted at a meeting of Directors should a quorum not be present.  

 

In addition, if meeting sessions do not convene within 30 minutes after the elected time, two types of approaches may be conducted. Firstly, the event may be moved either to the following week, with the same venue and time or secondly, dissolving the meeting, provided there is a mutual agreement between the participants.

 

Alternatively, Directors/Members who do not wish to conduct on a face-to-face basis are able to pass a Written Resolution.

 

Members who are unable to attend the meeting can appoint Proxies or Corporate Representatives.


Passing of a Resolution

Resolutions are defined as any formal decision made by either member (or Members), and Directors of the company. According to Section 311 of Companies Act 2016, they are able to be properly moved at a meeting UNLESS, the resolution: –

i.   If passed, would be ineffective whether by reason of inconsistency with any written law or the Constitution

ii.  Is defamatory of any person

iii. Is frivolous or vexatious

iv. If passed, would not be in the best interest of the company


For Special Resolutions, 75% of votes from the members are required in order for it to passed. The purpose of Special Resolutions are as follows: –

i.   Changing of business nature

ii.  Making amendments of company constitution

iii.  Winding up

iv.  Striking off


For Ordinary Resolutions, 50% of votes from the members are required before it can be passed. The purpose of Ordinary Resolutions are as follows: –

i.    Appointment and resignation of Directors

ii.   Removal of Directors

iii.  Appointment and removal of Auditors


For Director Meetings, the passing of Director Resolutions requires consensus from ALL current Directors of the company, unless otherwise specified in the company’s Constitution.


Proxies & Corporate Representatives

For Shareholder’s Meetings, proxies are often considered acceptable as legitimate replacements of shareholders who can’t participate in the meeting.

This is especially useful if an important meeting is being conducted to resolve a particular matter. If that were to occur, a proxy would be able to be elected, along with the share percentage of the absent shareholder elector being transferred to her/him (the proxy), establishing that nominated proxy as the absentee’s substitute.

In regards to Corporate Representatives, a corporate member can elect a person to act as its representative at any Meeting of Members (MoMs) of the company through passing of Director’s Resolution, according to Section 333(1) of Companies Act 2016.

An insight on Corporate Representatives is that, they carry equal power that are similar to Original Shareholders.

Voting Rights

During Meeting of Members (MoMs), participants are able to cast their votes to pass a resolution either of the following approaches: –

i.  Show of Hands – Every member shall have one vote

ii. By Poll – Every member shall have one vote in respect of each share held by him/her. 

Although, it should be noted that for Meeting of Members (MoMs), Ordinary Shareholders are entitled to vote whereas Preferred Shareholders aren’t. More on this topic can be found via the following link: 

https://incorp.my/2021/11/12/your-quick-slice-of-understanding-company-shares/

From our analysis so far, many requirements are to be met for these meetings to go through smoothly with some examples being, the minimum number of participating members of the quorum, notice period for meetings to be held, resolutions, and passing vote quota. With numerous details to be considered, could there be a much simpler alternative to resolve all these matters at once?

 

Well, look no further than Incorp, your trusted and compliant business partner of 38 years in Malaysia, which consists of a team of professionals and veterans capable in seeing through all your company secretary needs! This includes jotting down meeting minutes in both detailed and swift manner during meetings, essential documentations and preparation, along with other quality services that we have to offer! 

 

So, why wait any longer? Free your mind from unnecessary worries today by liaising with us via either of the following platforms: 

Email: secretarial@elegant.com.my 

WhatsApp: 017-2727118

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